types of customers and Customer value rev(1)

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Type of customers and Customer value:

Type of customers and Customer value

Types of customers:

Types of customers Apostles: In most cases, a loyalist is a customer who is completely satisfied and keeps returning to the company. Within the loyalist camp are individuals who are so satisfied, whose experience so far exceeds their expectations, that they share their strong feelings with others. They are apostles. Terrorists/Defectors Defector’s ranks include those who are more than dissatisfied, quite dissatisfied and neutral. The ‘merely satisfied’—many more than most managers realize, defect too. These could be highly satisfied customers who have encountered failures. But as articulated through the service recovery paradox, when a company has strong processes in place to redress such customers’ needs better, most of them can be converted into highly satisfied customers.


Continued.. Mercenaries Another customer who can make a company’s life miserable is the mercenary. This individual defies the satisfaction-loyalty rule. He may be completely satisfied but exhibits almost no loyalty. These customers are often expensive to acquire and quick to depart. They chase low prices, buy on impulse, pursue fashion trends or seek change for the sake of change. Hostages Such customers belong to those companies either who operate in a monopolistic environment or they are habituated to a particular brand and demonstrate inertia in brand switching. Often these customers experience the worst the company has to offer and must accept it.

PowerPoint Presentation:

HIGH Satisfaction Low Loyalty High LOW Mercenaries Happy and content customers who are not loyal to the company and tend to shop around and compare. On a lookout for a better opportunity. Apostles Highly content, loyal customers whose contact with potential customers is more valuable than any sales voice. Terrorists/Defectors Customers who are disappointed in their business relations with the company and tell everybody about their bad experience. Leave the services without informing, virtually lost. Hostages Disgruntled customers. Due to certain exit barriers, unable to change their service provider, though dissatisfied.

Linking profitability and loyalty:

Linking profitability and loyalty High profitability and short term customers (Butterflies) Low Profitability and short term customers (Strangers) Long term customers and low profitability (Barnacles) High profitability and long term customers (True friends) Strangers – little fit between company’s offerings and customer’s needs – lowest profit potential Butterflies – good fit between customer’s offerings and customer’s needs – high profit potential Barnacles – limited fit between company’s offerings and customer’s needs – low profit potential True friends – good fit between customer’s offerings and customer’s needs – highest profit potential

Customer value:

Customer value Customer value is the customer’s perceptions of what they want to happen (i.e. the consequences) in a specific use situation with the help of a product or service offering in order to accomplish a desired purpose/goal.

Customers’ Perception of Value :

Customers’ Perception of Value ■ Tradeoff between benefits received from offer versus sacrifices to obtain goods/services offer ■ Value creation occurs when product/service and user interact in particular use situation Johnson/Weinstein 2004 - NOVA SOUTHEASTERN UNIVERSITY

Customer value:

Customer value Another way of understanding different types of customer value relates to the categories defined by Kotler (Kotler 1990). These are: Product value Services value Personnel value Image value

Consumer’s definition of value:

Consumer’s definition of value Low price Whatever I want in a product or service The Quality I get for the price I pay What I get for what I give

Customer value (Defined by Barnes):

Customer value (Defined by Barnes) -Choice based value Choices created in how customers deal with the company, how they can pay for their purchases how they want them shipped or how they receive information


Continued.. Employee based value Providing customers with value through their people element as demonstrated by some companies like South West Airlines. Max Health Care operates a Mentor Programme. Under this unique program each patient is assigned a member (may be managers, non medical people, executives or even doctors) who are the single contact points for every requirement of the customer (either for doctor, cleaning, food or may be even for general enquiry). A mentor acts as the first touch point to the patient for every requirement and his job is to get the work done. Information value Providing customers with more information can increase value.


Continued.. Association value Customers derive value being associated with a certain service provider with whom they associate positive attributes or values.Especially true when companies are perceived as good corporate citizens Relationship value Value created when a firm makes its customers feel better about dealing with the company. In fact relationship marketing advocates supplier-customer interaction and contends maintaining long term relationships with a focus on customer retention


Continued.. Customer unique value This form of value is created for customers when firms treat them as individuals. Personalization will enable the inclusion of real-time data from transactional details – in both written and telephone communications–and the ability to purchase preferences. This further enhances customers’ perception of themselves as a valuable and individual customer.


Continued.. Experience value -Experience is defined as exchange of stimuli, information and emotions between company and customer. -Experiences are built around feelings, emotions, smells, colours, spaces, sounds, human contact and branding. -Experience marketing is incorporating, building and nurturing experiences and feelings before, during and after purchase of goods and services and creating an environment that facilitates this process.


Example At Max New York Life, in order to achieve memorable customer experience, all critical touch points impacting service experience are mapped which include Agent servicing-Acquisition experience Medical tests experience Call Centre experience Website experience Complaint resolution experience Policy issuance (Policy pack experience) Renewals (Premium notice, payment, receipt) experience POS experience Refunds experience Claims experience


Continued.. Product-for-price value This is characterized by customers who equate value with price and will switch to the competition for a lower price. Access or convenience value This form of value is created when firms make it easy for customers to access their products and services and to deal with them

The S-Q-I-P Approach:

The S - Q - I - P Approach Value is a combination of: -> S ervice , Q uality , I mage, P rice ■ The service factor must reign supreme in value-creating organization. The S - Q - I - P elements do not exist independently; they involve tradeoffs considering the costs of developing and sustaining a leadership position

The SQIP Diamond:

The SQIP Diamond VALUE Service Price Image Quality

Value Calculus:

Value Calculus Perceived product or service attributes Perceived product or service price Perceived substitute product or service price Perceived benefits Perceived price Value = Perceived substitute product or service attributes

Value Creation Index:

90 Value Creation Index Innovation Quality Customer Relations Management Capabilities Alliances Technology Brand Value Employee Relations Environmental & Community Issues Source : Kalafut, P. and Low, J. (2001) “The Value Creation Index”, Strategy and Leadership , Vol. 20, No. 5, 9-15 .

How Southwest Airlines Creates Superior Value:

How Southwest Airlines Creates Superior Value Process Mastery Treat Employees as Customers Recruitment and Training Maverick Culture Teamwork Clear Service Focus

How Starbucks Creates Superior Value:

How Starbucks Creates Superior Value Roasting Technology Create the right Store Atmosphere Recruitment and Training Treat Employees as Partners Brand Consistency Service Consistency

Customer value management:

Customer value management Customer value management is defined as a systematic approach to: 1. Understand what causes customer purchase and repurchase behaviour. 2. Predict the future purchase behaviour of customers and potential customers and. 3. Maximize future purchase behaviour by managing the predictors (Khalid and Scott 2005). It is a process that enables businesses to determine how well they address the expectations and needs of prospective and direct customers, distributors and end users relative to competition.

PowerPoint Presentation:

1. What do target customers value? 2. Of all the value dimensions that target customers want, which are most important 3. How well (poorly) are we doing in delivering the value that target customers want ? 4. Why are we doing poorly (well) on important value dimensions? . 5. What are the target customers likely to value in the future? Process of determining customer value

Value Profile - Car Co.:

Value Profile - Car Co. Category/ Weightage Performance (1-10) Value Score (WxP) Factor A B C A B C Style 20 5 7.5 6 100 150 120 - Shape -Colour -Glass Area Engineering 30 8 8 6 240 240 180 -Power - Maintenance - Safety Comfort 30 6 8 7 180 240 210 - Legroom -Driving - Options Spares & 20 8 8.5 5 160 170 100 Services Total 100 680 800 610

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